Operational management of contractual and transactional interactions between buyers, sellers, financial institutions and others involved in the exchange of products and/or services for purposes of commerce have typically been labor and time intensive. Generally, the processes of managing transactions between business entities have been unduly burdensome and inefficient.
Many transactions involve a variety of parties interacting at different hierarchical levels and in connection with different aspects of the transactions. For example, transactions involving different facets of performance (e.g., the provision of products or services) that can be fulfilled by different entities often involve two or more suppliers. For instance, when a transaction involves the provision of a multitude of goods, the goods may be sourced from different suppliers under the guise of the same transaction. Similarly, a service-based transaction may involve the provision of different aspects of service under the same contract. Further, transactions involving the purchase of a product often involve the provision of a product as well as shipping services for delivering the product from a seller to a buyer. These transactions also may involve processing services and/or fees along the delivery route, such as customs clearance at port of export, import/export duty fees, and insurance during transit, the responsibility for which can change amongst the parties depending on where the goods are actually located at a point in time. Using the shipping example, for many shipping transactions (e.g., that are separate from the purchase of goods being shipped), there is often a shipper (the entity arranging for shipment of the goods), a carrier (the entity carrying the goods), a seller (the entity selling the goods), an insurer (the entity providing transit insurance to the shipper, the carrier and/or the buyer), and a buyer (the entity receiving the goods). In this regard, the shipment itself can be considered a single shipping portion of a more complex transaction beginning with an agreement between a buyer and a seller. In some instances, the seller acts as the shipper and arranges and pays for shipment of the goods separately from the buyer and with the cost of the shipment effectively built into the cost of the goods. In other shipping transactions, the seller arranges for shipment of the goods per the buyer's instructions and the buyer pays for the shipping services directly to the party selected by the seller.
In the above-discussed and other types of transactions, the seller sometimes performs by providing goods and/or services directly and, at other times, the seller contracts with a performing party to perform some or all of the transaction aspects. In this instance, the seller acts as an intermediary, with the buyer agreeing to pay an amount contracted between the intermediary seller and the buyer. The seller in turn agrees to pay the performing parties (e.g., subcontractors) an amount contracted between the seller and each performing party.
In each of the above examples, various invoices and related activities (accounting, adjustments, etc.) are required for each contract in the chain of contracts between buying, selling, intermediary or performing parties. In addition, tracking activities for commercial and regulatory purposes often require that records be kept for the transaction. These activities are time consuming, subject to error and often duplicative in nature. For example, at the payment step, financial institutions for different parties to the transaction must interact with each other. This interaction typically involves complex agreements and associations that facilitate the transfer of funds. At times, there can be delays in payment or disputes regarding terms of payment. In addition, this process is highly susceptible to error. Interaction complexity, delay, error and a multitude of other characteristics of transaction payment can cost one or more parties to a transaction (including financial institutions) a significant amount of funds.
Most industries are quite competitive and any cost savings are therefore important. Administrative costs are targeted for reduction as no revenue is directly generated from administrative functions. However, administrative costs associated with commercial transactions have been difficult to reduce in the current business environment with widely diffused data.
The above and other difficulties in the management and coordination of business transactions have presented administrative and cost challenges to business entities involved in various aspects of transactions, including financial institutions and others.